More than 32,000 Australians declared personal bankruptcies in 2018 financial year, new data shows

Personal bankruptcies across Australia are at an eight-year high and experts are warning that a combination of rising debt, stagnant wage growth and falling house prices could herald more bad news for people living on the east coast.

More than 32,000 Australians declared bankruptcy during the 2018 financial year, according to data analytics company illion, which found personal bankruptcies rose 4 per cent across the country.

Western Australia and the Northern Territory took the biggest hits.

Bankruptcies rose by 11.7 per cent in Western Australia, the sharpest year-on-year increase, followed by the Northern Territory, which experienced a 10.6 per cent rise.

Queensland had the highest number of bankruptcies in the country — more than 9415 people declared personal bankruptcy in the Sunshine State over the past year — but the rate of increase slowed to 1.5 per cent. 

illion CEO Simon Bligh said while the economies of Queensland, Western Australia and the Northern Territory had recently turned a corner from the resources industry bust and cooling property market, they were still doing it tough, as evident in the the latest figures.

He warned that a combination of rising debt levels, stagnant wage growth and falling house prices could mean more personal bankruptcies for Australians on the east coast.

Almost 6000 people in NSW declared bankruptcy in the last financial year, which was a 7.6 per cent increase from the previous year.

Victoria by contrast was the only state that saw a decline (of 2.2 per cent) with 5809 people declaring bankruptcy in the same period.

illion’s economic advisor Stephen Koukoulas said while the data collected did not offer explanations for bankruptcies, there was a strong link between a state or territory’s economic performance, its housing market and an individual’s personal financial health.

“From a big-picture point of view, there is no doubt on a state-by-state basis that when the economy is strong, bankruptcies are low, and vice-versa,” Mr Koukoulas said.

“A lot of small businesses leverage their business borrowings with the security of their mortgage.

“When the housing market turns down, like in Perth and Darwin in particular, and we’re just starting to see that in Sydney, the banks are less inclined to extend that line of borrowing.”

Mr Koukoulas said Australians in regional areas might be also be under increasing financial pressure because of the drought – many regional postcodes topped the list in several states.

Mr Bligh expected NSW and even Melbourne to see an uptick in personal bankruptcies as further forecast falls in the property market took effect.

“The lights are flashing red across several regions in terms of rising consumer stress levels,” Mr Bligh said.

“Sydney’s declining property market and the significant rise in personal bankruptcies could be mirrored in Melbourne in [financial year] 2019, as its property market is showing signs of following the same downwards trajectory,” he said.

Mr Bligh said the top three suburbs in Victoria were in outer Melbourne and areas “where there has been a lot of new residential housing in the last decade and quite rapid population growth.”

“That could indicate that in those areas people are perhaps entering into the housing market they weren’t able to do so,” Mr Bligh said.